Nestle Set To Miss Growth Targets Again

Food giant Nestle (VTX:NESN) reports a slight rise in sales for the first nine months or the year. Organic sales rose 3.3%, up from previously and are in line to deliver growth of 3.5% for the year. The company had previously indicated expected growth of 4.2% for the year.

The latest set of results show total sales at CHF 65.5 billion. This is up nearly 1% from the previous year. This figure lagged several estimates from analysts and continues to show lackluster sales growth that has marred results in recent years.

A closer look at the figures reveal that the company did achieve solid organic growth in emerging markets. This is despite tough trading conditions persisting in key market such as Brazil and China. Real growth in developed markets was however limited.

Lower growth was attributed to what was described by Chief Executive Paul Bulcke as “soft demand”. He went on to add that “[the company] …continued to privilege volume growth, resulting in real internal growth at the higher end of the industry in both emerging and developed markets.” Improvement in market, structural and capital remained the focus for the remainder of the year.

Nestle SA the largest food and drink company in the world has struggled to meet recent growth targets. The company whose product range encompasses baby food, cereals, coffee, confectionery and pet foods has failed to translate its market share into profits. The latest figures are the forth successive year that it will fail to meet its long term sales targets.

The shares which are traded on the Swiss xx exchange were down 1.7% at the open. Morgan Stanley recently issued a ‘buy’ rating on the stock. The stock currently has 14 buy ratings, 5 hold ratings and 3 sell ratings.

Outlook

Price currently sits above the 200 day moving average and is looking for support after several week sessions. It is worth noting that brokers highlight tough trading conditions in the sector. Price pressures and slowing growth continue to impact bottom lines.

Traders looking to play the support level could use this MA to position for a move higher or watch for a break lower if market conditions remain unfavorable.

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